Competition, Economy Dull Snet Earnings

Snet Reports 6% Decline In Earnings

October 19, 1991|By ANTHONY GIORGIANNI ; Courant Staff Writer

Southern New England Telecommunications Corp. Friday reported third-quarter earnings of $38.3 million, or 62 cents a share, a 6 percent drop that analysts said was typical in an industry struggling with the recession and heavy competition.

In the same quarter last year, the company's earnings from operations were $39.9 million, or 66 cents a share. However, the company took a charge of $24.7 million in one-time expenses from debt refinancing and uncollectable payments on telephone bills. That reduced net earnings to $15.2 million, or 26 cents a share.

"These are tough times for the Northeast, and it isn't getting easier," Monteith said in a statement.

The company's stock closed Friday at $30.87 1/2 a share, down 25 cents in trading on the New York Stock Exchange.

The company reported third-quarter revenues were $416.7 million, up from $407.9 million. The slight increase came despite a $47.7 million revenue increase approved by state utility regulators last June for the company's subsidiary, Southern New England Telephone.

That revenue increase and others among the company's subsidiaries were nearly offset by additional expenses and a 34 percent revenue reduction in SNET Systems. SNET Systems, which sells telephone equipment to businesses, had third-quarter revenues of $23.1 million, compared with $35 million for the third quarter last year.

John C. Culver, assistant vice president and telecommunications analyst for Duff & Phelps, said he was not surprised by the third-quarter results, which mirror those of the rest of the industry.

"It's kind of been the story this year that we're looking at pretty much flat-to-down earnings," he said.

In addition to a poor economy, he said, the earnings of small telephone companies are being reduced by several factors. Among them is a Federal Communiciation Commission decision that reduced

the rates small companies can charge large interstate telephone companies, such as American Telephone & Telegraph Co., for carrying the in-state long distance calls.

Also, he said, the industry is facing increased competition. Southern New England Telecommunciations Corp., for example, reduced the rates it charges businesses for 800-number and WATS lines because state regulators permitted other companies to sell those services in Connecticut.

Culver said he expects the company's earnings to improve next year to reflect a reduction of 1,000 workers who have agreed to leave their jobs by the end of the year to take advantage of the company's early-retirement incentives. The incentives are part of a cost-cutting plan.

But Culver said the company's earnings will depend to a greater degree on the economy; and he said there is no "solid evidence" that the economy will improve.